SCF Waxler Marine, L.L.C. v. Aris T M/V, et ( 2018 )


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  •       Case: 17-30805          Document: 00514703084   Page: 1   Date Filed: 10/30/2018
    REVISED OCTOBER 30, 2018
    IN THE UNITED STATES COURT OF APPEALS
    FOR THE FIFTH CIRCUIT
    No. 17-30805
    United States Court of Appeals
    Fifth Circuit
    FILED
    SCF WAXLER MARINE, L.L.C.,                                            August 29, 2018
    Lyle W. Cayce
    Plaintiff                                                  Clerk
    v.
    ARIS T M/V,
    Defendant
    -----------------------------------
    In re: In the Matter of the Complaint of Cenac Marine Services, L.L.C., as
    Owner and Operator of the M/V LORETTA CENAC, BARGE CTCO 338,
    BARGE CTCO 339, and BARGE CTCO BARGE 357B, for Exoneration From
    or Limitation of Liability
    CENAC MARINE SERVICES, L.L.C., etc.
    Petitioner
    VALERO REFINING - NEW ORLEANS, L.L.C.; MOTIVA ENTERPRISES,
    L.L.C.,
    Third Party Plaintiffs Claimants - Appellants
    v.
    CONTINENTAL INSURANCE COMPANY; AGCS MARINE INSURANCE
    COMPANY; NEW YORK MARINE AND GENERAL INSURANCE
    COMPANY; STONINGTON INSURANCE COMPANY; NATIONAL
    SPECIALTY INSURANCE COMPANY; LLOYD'S SYNDICATES,
    Case: 17-30805    Document: 00514703084      Page: 2   Date Filed: 10/30/2018
    No. 17-30805
    Third Party Defendants - Appellees
    v.
    SHELL CHEMICAL, L.P.,
    Claimant - Appellant
    Appeals from the United States District Court
    for the Eastern District of Louisiana
    Before STEWART, Chief Judge, and JONES and ENGELHARDT, Circuit
    Judges.
    CARL E. STEWART, Chief Judge:
    A stream of litigation followed a marine accident that resulted in
    damages estimated to exceed $60 million. The underlying fault or liability for
    that accident is not at issue on appeal. Rather, Valero, Shell, and Motiva ask
    this court to resolve whether the excess insurers of one of the involved vessels
    may limit their liability to that of the insured vessel. On a partial motion for
    summary judgment, the district court held that the Protection and Indemnity
    policy covering the vessel has a Crown Zellerbach clause thereby permitting
    the excess insurers to limit their liability to that of the insured vessel.
    Valero, Shell, and Motiva timely appealed, asserting that this court has
    jurisdiction to hear an appeal of that interlocutory order under 28 U.S.C.
    §1292(a)(3). Because we lack appellate jurisdiction, we DISMISS.
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    No. 17-30805
    I.     FACTUAL BACKGROUND AND PROCEDURAL HISTORY
    On January 31, 2016, bulk carrier Aris T collided with a tank barge, a
    towing vessel, and two facility structures along the Mississippi River upriver
    from New Orleans. Prior to the accident, the Aris T was proceeding upriver as
    two towing vessels, the Elizabeth M. Robinson and Loretta G. Cenac, were
    moving downriver toward their respective destinations. Both towing vessels
    were pushing ahead three loaded tank barges, each barge 300 feet long and 54
    feet wide. Despite communications between the captains of each vessel about
    facilitating the Loretta G. Cenac’s attempted pass of the Elizabeth M.
    Robinson, an accident occurred after the Aris T struck the portside of an empty
    tank barge which in turn struck another tank barge. The barges were
    connected by the stern to the bow of towing vessel SCF Vision moored at a dock
    owned by Valero Refining – New Orleans (“Valero”). In the aftermath of this
    initial collision, the Aris T, still moving upriver, struck another towing vessel
    as well as multiple berths owned by Shell Chemical, L.P. (“Shell”) and Motiva
    Enterprises (“Motiva”). Both tank barges, the facility dock, and the SCF Vision
    sustained damage.
    On February 2, 2016, SCF Waxler Marine, LLC, owner and operator of
    damaged towing vessel SCF Vision, filed suit against the Aris T in the Eastern
    District of Louisiana. Soon thereafter, Valero, Shell, and Motiva also filed
    actions against the Aris T. Seeking to limit its liability for damages resulting
    from the accident, the Aris T filed a Verified Complaint in Limitation under
    the Limitation of Liability Act (46 U.S.C. §§ 30501–12), arguing that it was not
    at fault for the accident. The vessel most relevant to this appeal—the Loretta
    G. Cenac through its owner Cenac Marine Services, LLC (“Cenac”)—similarly
    filed a Verified Complaint for Exoneration from or Limitation of Liability. The
    district court consolidated that action along with others related to the accident.
    The Exoneration Complaint sought declaratory relief from the district court
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    providing that Cenac was not liable or, if found liable, that its liability be
    limited to the value of Cenac’s interest in the vessels involved—$14,602,365
    (value of the vessels plus freight).
    Louisiana’s Direct Action Statute permits persons sustaining damages
    in accidents occurring in Louisiana to bring direct actions against insurers of
    the individual alleged to have caused the accident. LA. REV. STAT. ANN.
    22:1269. Subject to a handful of exceptions not applicable here, a direct action
    may not be brought against the insurer alone. See 
    id. at B(1)(a)-(f).
    On January
    24, 2017, Valero, Shell, and Motiva exercised this right, impleading Cenac’s
    Primary 1 and Excess 2 Insurers pursuant to Federal Rule of Civil Procedure 14.
    They claimed that the Excess Insurers, by virtue of Louisiana’s Direct Action
    Statute, were liable to Valero, Shell, and Motiva for all damages sustained in
    the accident that were the fault of Cenac.
    Valero, Shell, Motiva, and the Excess Insurers 3 then quarreled about
    whether the primary P&I policy, issued by the Primary Insurers and followed
    by all Excess Insurers, had language indicating that the insurers could limit
    their liability to that of the Loretta G. Cenac. That is, whether the P&I policy
    contains a “Crown Zellerbach clause.” See Crown Zellerbach Corp. v. Ingram
    Indus., Inc. 
    783 F.2d 1296
    (5th Cir. 1986) (en banc).
    1  Continental Insurance Company and AGCS Marine Insurance Company are Cenac’s
    Primary insurers and provide a policy with $1 million in coverage. They will collectively be
    referred to as the Primary Insurers throughout this opinion.
    2 New York Marine and General Insurance Company and Stonington Insurance
    Company National Specialty Insurance Company (“First Excess Insurers”) are Cenac’s First
    Excess Insurers and provide policies with $29 million in coverage. Certain Underwriters at
    Lloyd’s of London (“Second Excess Insurers”) are Cenac’s Second Excess Insurers and provide
    policies with $70 million in coverage. The First and Second Excess Insurers will be
    collectively referred to as the Excess Insurers throughout this opinion.
    3 The Primary Insurers did not oppose the partial motion for summary judgment. On
    appeal the Primary Insurers maintain a hands off approach. Their brief on appeal simply
    explains that they are unaffected by the outcome of this appeal because the limitation fund
    posted by Cenac exceeds the $1 million limit of their policy.
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    Valero, Motiva, and Shell filed a motion for partial summary judgment
    to settle the Crown Zellerbach issue. On September 6, 2017, the district court
    sided with the Excess Insurers, denying the motion. More specifically, the
    district court concluded that the following provision satisfied Crown
    Zellerbach’s requirements for an insurer to limit its liability:
    The Assurer hereby undertakes to make good to the Assured or the
    Assured’s executors, administrators and/or successors, all such
    loss and/or expense as the Assured shall as owners of the
    vessel named herein have become liable to pay and shall pay
    on account of the liabilities, risks, events and/or happenings herein
    set forth . . . .
    Valero, Motiva, and Shell timely appealed on October 5, 2017. They assert
    that this court has jurisdiction to hear the appeal pursuant to 28 U.S.C. §
    1292(a)(3).
    II.    JURISDICTION
    The Excess Insurers contend that this court lacks jurisdiction to hear
    this interlocutory appeal under § 1292(a)(3) because the district court’s Order
    and Reasons fails to “determin[e] the rights and liabilities of the parties.” We
    agree.
    Although this court must satisfy itself of its own jurisdiction, Valero,
    Shell, and Motiva “‘bear[] the burden of establishing this court’s appellate
    jurisdiction over this appeal,’ and there is no need to explore jurisdictional
    bases the appellant does not address.” Thibodeaux v. Vamos Oil & Gas Co.,
    
    487 F.3d 288
    , 293 (5th Cir. 2007). This court’s appellate jurisdiction is
    ordinarily limited to “final decisions of the district courts of the United
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    States.” 4 28 U.S.C. § 1291. Where permitted by statute, however, this court
    may hear interlocutory appeals satisfying certain requirements.
    Relevant here, § 1292(a)(3) provides that appellate courts may entertain
    appeals from a district court’s “[i]nterlocutory decrees . . . determining the
    rights and liabilities of the parties to admiralty cases.” This circuit has
    construed the grant narrowly, hewing closely to the statute’s “original purpose
    of permitting appeals from orders finally determining one party’s liability to
    another and referring the action for a computation of damages.” Hollywood
    Marine, Inc. v. M/V Artie James, 
    755 F.2d 414
    , 416 (5th Cir. 1985) (Rubin, J.).
    This court looks beyond the characterization of the ruling at issue and to the
    substance of what the lower court decided. See Treasure Salvors, Inc. v.
    Unidentified Wrecked & Abandoned Sailing Vessel, 
    640 F.2d 560
    , 564 (5th Cir.
    1981).
    We have clarified that appellate jurisdiction is generally appropriate
    “whenever an order in an admiralty case dismisses a claim for relief on the
    merits.” Francis ex rel. Francis v. Forest Oil Corp., 
    798 F.2d 147
    , 149 (5th Cir.
    1986) (per curiam). That is not to say that all claims (or rights and liabilities)
    of all parties must be determined before this court may invoke jurisdiction;
    rather, the heartland of this court’s jurisdiction over an interlocutory appeal
    under § 1292(a)(3) is a conclusive determination of the rights and liabilities as
    to the claim on appeal. See In re Complaint of Ingram Barge Co., 
    517 F.3d 246
    ,
    247 (5th Cir. 2008) (“Interpreting Section 1292(a)(3), we then held ‘that in
    admiralty the liability of only one party need be determined for an
    interlocutory appeal to lie.’”).
    4 Notably, one of Appellants’ counsel conceded during oral arguments that there was
    nothing precluding this court’s review of the ruling at issue after a final judgment.
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    For example, in In re Ingram Towing Co., this court concluded that
    jurisdiction was not proper under § 1292(a)(3) where the district court did not
    determine liability or determine that a party could never bring a claim against
    the opposing party. 
    59 F.3d 513
    , 516–17 (5th Cir. 1995). In other words, this
    court lacked jurisdiction to hear an appeal of a district court’s determination
    of “how and where the rights and liabilities would be determined.” 
    Id. at 517.
    Similarly in Hollywood Marine, this court held that an order finding that an
    insurer could not deny coverage under its policy did not provide appellate
    jurisdiction under § 
    1292(a)(3). 755 F.2d at 415
    –16. The Hollywood panel
    explained that jurisdiction under the statute is not appropriate where “the
    party whose contention is rejected remains in the litigation and the issue of its
    liability on the claim asserted remains to be finally resolved.” 
    Id. at 416.
    The
    decision did not “completely cut off” a party’s ability to pursue the claim. See
    Crews v. Arundel Corp., 
    386 F.2d 528
    , 530 (5th Cir. 1967). As this court plainly
    stated in Hollywood, § 1292(a)(3) offers no appellate jurisdiction where the
    district court’s order “does not conclusively determine [a party’s] ‘rights and
    liabilities’ as to the claim asserted.” Hollywood Marine, 
    Inc., 755 F.2d at 416
    .
    The principal dispute on the jurisdictional question in this case revolves
    around the applicability of this court’s per curiam decision in Bucher-Guyer AG
    v. M/V Incontrans Spirit, 
    868 F.2d 734
    (5th Cir. 1989) (per curiam). The Excess
    Insurers argue that the decision governs this case. First, they note that
    Bucher-Guyer is particularly instructive because the court held that we lack
    jurisdiction over an appeal of a district court’s order stating that a statutory
    limitation on damages was applicable to a case. The court would still have to
    remand the case to the district court for a decision on whether the party
    entitled to a cap on its liability was actually liable. The Excess Insurers press
    that the same logic applies here. Valero, Shell, and Motiva distinguish Bucher-
    Guyer by arguing that the court’s decision there did not concern the grant of a
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    substantive right, as here, and concerned a statute—the U.S. Carriage of
    Goods by Sea Act—that has no bearing on this case. Lastly, Valero relies on
    Wallis v. Princess Cruises, Inc., where the Ninth Circuit held that a district
    court’s conclusion concerning an insurance contract provision was appealable
    because, among other things, a holding to the contrary “would make
    interlocutory appeals impossible in many admiralty cases, and would do so in
    precisely those cases where appeals are most needed.” 
    306 F.3d 827
    , 834 (9th
    Cir. 2002). In the same vein as their approach to Bucher-Guyer, Valero, Shell,
    and Motiva argue that this court has appellate jurisdiction because the district
    court, in denying their motion for partial summary judgment, granted the
    Excess Insurers rights that did not exist before that decision. In other words,
    the district court determined that Cenac could actually limit that liability
    based on an insurance contract clause. This determination was the final
    pronouncement on the extent of the Excess Insurers’ liability in this case. That
    finality is not diminished, they urge, merely because the district court did not
    rule on the issue of liability. It is sufficient that the boundaries and limits of
    liability are now set in stone.
    The Excess Insurers present a more persuasive view of this jurisdictional
    dispute. In Bucher-Guyer, this court held that the applicability of a $500
    limitation on liability pursuant to the Carriage of Goods at Sea Act (“COGSA”)
    was not a determination of a party’s rights and liabilities for purposes of §
    1292(a)(3). 
    Bucher-Guyer, 868 F.2d at 735
    ; see also Hager v. Laurelton Welding
    Serv., Inc., 124 F. App’x 104, 106–07 (3d Cir. 2005) (unpublished) (Scirica, J.)
    (expressing agreement with Fifth Circuit approach to issue of “whether orders
    regarding limitations of damages are appealable under § 1292(a)(3)”).
    The fundamentals of Bucher-Guyer bear a striking resemblance to this
    case. There, the district court determined the boundaries of a party’s liability—
    $500—based on the applicability of statutory language. Nevertheless, whether
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    the opposing party was entitled to anything and, if so, how much was still to
    be determined. In this case, the court decided the boundaries of a party’s
    liability through determination of whether a contractual provision permitted
    them to do so. Whether Valero, Shell, and Motiva are legally permitted to
    recover anything from the Excess Insurers and, if so, how much remains to be
    determined. That question turns on the fault and or liability of the Loretta G.
    Cenac. Answering the important, but ancillary, question about the extent of
    the insurer’s potential liability leaves the heart of the claim to be decided.
    Valero, Shell, and Motiva attempt to dismiss the relevance of this
    decision because: (1) Bucher-Guyer does not address an insurance policy
    provision; (2) the statute at issue in that case—the U.S. Carriage of Goods
    Act—has no bearing on this case; and (3) here the district court did not find a
    statutory right to entitlement; rather, the focus was on a policy provision.
    Valero, Shell, and Motiva advance these arguments despite asking this court
    to instead rely on Wallis—a case that rejects the first two of their proffered
    distinguishing features.
    In Wallis, the Ninth Circuit addressed whether that court had appellate
    jurisdiction over a district court’s determination of the applicability of a
    contractual limitation of liability provision. In analyzing that issue, the Ninth
    Circuit explained that § 1292(a)(3) case law concerning the Carriage of Goods
    at Sea Act was 
    instructive. 306 F.3d at 832
    –35.
    Beyond not being helpful to Valero, Shell, and Motiva’s attempt to
    distinguish Bucher-Guyer, Wallis expressly noted that the panel disagreed
    with and would not follow this court’s interpretation of § 1292(a)(3). 
    Id. at 833–
    34 (collecting cases from other circuits, including the Fifth Circuit, and stating
    “[w]e think that these other circuits have read § 1292(a)(3) too narrowly”).
    However, we stand by Bucher-Guyer. We also find persuasive the Eleventh
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    Circuit’s reasoning in Wajnstat v. Oceania Cruises, Inc., addressing a similar
    issue to the one we analyze here. 
    684 F.3d 1153
    (11th Cir. 2012) (Carnes, J.).
    In Wajnstat, the Eleventh Circuit analyzed whether § 1292(a)(3)
    permitted the appeal of a district court order determining whether a
    “limitation-of-liability provision in a cruise ticket contract was unenforceable
    and, as a result, inapplicable.” 
    Id. at 1155.
    Citing to this circuit’s § 1292(a)(3)
    jurisprudence, the Wajnstat panel held that a district court’s order denying a
    motion for partial summary judgment on a limitation-of-liability affirmative
    defense failed to meet the requirements of § 1292(a)(3). 
    Id. at 1155–56.
    Announcing a rule that is eminently reasonable, the Eleventh Circuit
    explained as follows:
    If, as [the Fifth Circuit in] Ford Motor Co. held, a district court
    does not determine the “rights and liabilities of the parties” when
    it decides the applicability of a statutory limitation of liability, it
    also does not determine the “rights and liabilities of the parties”
    when it determines the applicability of a contractual limitation of
    liability.
    
    Id. at 1155.
    We find no compelling reason to distinguish between a district court’s
    determination of a contractual entitlement rather than statutory entitlement
    to limit liability. 5 Neither decision is reviewable on appeal under § 1292(a)(3).
    We join the Eleventh Circuit in so holding.
    5  It is true that Crown Zellerbach refers to the “right to assert [a] policy 
    defense.” 783 F.2d at 1300
    (emphasis added). And thus, according to Valero, Shell, and Motiva,
    determination of the applicability of such a clause determines the Excess Insurers’ rights.
    This argument is essentially what one of Appellants’ counsel referred to as their “plain
    language” argument. This point is much too fine. Valero, Shell, and Motiva’s argument that
    the district court determined the Excess Insurers’ “right” to limit liability falls in the face of
    the simple fact that, distilled to its essence, the determination is about ascertaining whether
    a party is merely permitted to limit its liability should the insured be found able to do so.
    Crown Zellerbach acknowledged that even those insurers who can qualify for limitation of
    liability under the issued policy must demonstrate “a right to it by,” among other things,
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    If the district court had determined that the Excess Insurers via the
    shipowner’s liability were not entitled to exoneration or limitation—requiring
    a determination of actual liability and having res judicata effect—jurisdiction
    would likely be appropriate. See, e.g., Republic of France v. United States, 
    290 F.2d 395
    , 397 (5th Cir. 1961) (exercising appellate jurisdiction over denial of
    exoneration or limitation of liability where the district court concluded that
    appealing party was negligent and thus not entitled to limitation). Similarly,
    the court has expressed willingness to hear appeals where indemnity or
    coverage by an insurer of an insured is altogether denied. 
    Thibodeaux, 487 F.3d at 292
    –93 n.1 (“An order denying indemnity completely settles the third-
    party’s liability as to both the plaintiff and the principal defendant, as it
    establishes that the third party has no liability whatsoever.”). These scenarios
    are not present here.
    Shell, Motiva, and Valero also rely on this court’s decision in Gabarick v.
    Laurin Maritime (America), Inc., when asserting that this court has exercised
    jurisdiction over interlocutory admiralty appeals under § 1292(a)(3) where, as
    here, the trial court interpreted part of a marine insurance policy before any
    liability determinations had been made. 
    649 F.3d 417
    , 420–21 (5th Cir. 2011).
    Notwithstanding that errant characterization, Gabarick does not govern the
    jurisdictional inquiry in this case. In Gabarick, excess underwriters filed an
    interpleader complaint in the district court seeking release from further
    liability under the excess policy upon deposit of their policy limit of $9 million
    into the court’s registry. Upon deposit of this amount, all claims by and against
    the excess underwriters would be dismissed. 
    Id. at 420.
    The district court
    having the vessel owner “establish that the casualty occurred without the [vessel] owner’s
    privity and fault.” 
    Id. at 1303.
    In other words, irrespective of the applicability of a limitation
    of liability insurance provision, under Louisiana’s Direct Action Statute, “there must be a
    legal liability on part of the assured for the insurer to have a direct action liability.” 
    Id. at 1301.
    Section 1292(a)(3) does not confer jurisdiction under these circumstances.
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    concluded, contrary to the underwriters’ contention, that they owed
    prejudgment interest on their policy limit. 
    Id. The district
    court’s decision
    conclusively determined what amount the excess insurers would be required
    to submit to be dismissed from the action. 
    Id. Accordingly, the
    panel concluded
    that the district court’s decision requiring the insurers to deposit more than
    they believed appropriate before they would be dismissed from the case
    “affected a ‘liability.’” 
    Id. at 421.
    Suffice it to say that whatever the import of
    Gabarick for its jurisdictional analysis, that case simply does not guide us
    where the underlying district court order determines a party’s entitlement to
    a contractual limitation of liability. 6
    III.   CONCLUSION
    For the foregoing reasons, this appeal is DISMISSED for lack of
    jurisdiction.
    6 Our conclusion is not changed by the Federal Rule of Appellate Procedure 28(j) letter
    filed by Motiva and Shell after oral argument. The cases cited, similar to Gabarick,
    conclusively decided how much a party was required to deposit to satisfy their legal or policy
    obligations. It is fair for Motiva and Shell to make clear that this court has exercised
    jurisdiction prior to a final determination of liability in a case. But, again, the question
    preceding the determination of liability matters. Where the question, as here, is whether a
    potentially liable party may limit his liability, §1292(a)(3) does not afford this court
    jurisdiction where the underlying claim for liability has not been adjudicated. Moreover, as
    Motiva and Shell ostensibly concede, the cited decisions did not meaningfully analyze the
    jurisdictional question. Stated simply, where the district court answers the question of
    whether a party may, under a contractual provision, limit his liability should the liability
    question be determined in his or his insured’s favor, we will not exercise jurisdiction.
    12